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1 - 8 of 8 (0.30 seconds)Radhakrishna Behari Lal vs Commr. Of Income Tax on 15 February, 1954
4. Mr. N. P. Agrawala, learned counsel for the assessee, contended, and, in my view, rightly so, that the position under Section 68 of the 1961 Act is in no way different from that with regard to cash credit entries prior to the 1961 Act; and although there was no specific statutory provision in the 1922 Act, the principles which governed cases arising under the 1922 Act would also govern cases falling under Section 68 of the 1961 Act. Learned counsel further contended that there was absolutely no inconsistency in the various decisions of the various High Courts as also of the Supreme Court in so far as the question at issue is concerned. One line of cases lays down that, where an assessee shows that the entries regarding cash credits in third parties' accounts are genuine and the sums were, in fact, received from third parties as loans or deposits, the onus is discharged by the assessee. In that case it would be for the third parties to explain their sources of the money so advanced. In any event, such loans cannot be charged as the assessee's income, in the absence of any cogent material to indicate that they belonged to the assessee. The position in law, however, is different in so far as the degree of heaviness of the burden to prove varies where the credit entries in the assessee's books of account are in favour of, say, partners of the firm, of which the assessee is himself a member, in the assessee's own name in any different capacity, in the name of the assessee's wife or children, in the names of other near relatives of the assessee, in the names of employees of the assessee, or in the names of other such units as have got some financial interest common to the assessee. In my view, the law is too well-settled, and this I say not only on account of consensus of judicial opinion, but also for the additional reason that, stretching the doctrine of onus too far, in the case of entries in favour of third parties, who themselves come forth and admit that they had advanced the loans, the addition of such amounts as from undisclosed sources or secreted profits in the assessee's books of account, on rejection of such statements made by disinterested third parties, would lead to an absurd inconvenience, which the statute does not envisage. Decisions are numerous; to wit, a Bench decision of this court in Radhakrishna Bihari Lal v. Commissioner of Income-tax, [1954] 26 ITR 344 (Pat), a Bench decision of the Nagpur High Court in Jainarayan Balabakas of Khamgaon v. Commissioner of Income-tax, [1957] 31 ITR 271 (Nag), a Bench decision of the Allahabad High Court in Ram Kishan Das Munnu Lal v. Commissioner of Income-tax, [1961] 41 ITR 452 (All) and a Bench decision of the Bombay High Court in Orient Trading Co. Ltd. v. Commissioner of Income-tax, [1963] 49 ITR 723 (Bom), may be referred to as authorities for the proposition that, if a credit entry stands in the name of the assessee himself, the burden is undoubtedly on him to prove satisfactorily the nature and source of that entry and to show that it does not constitute a part of his income liable to tax. If the credit entry stands in the names of the assessee's wife and children, or in the name of any other near relation, or an employee of the assessee, the burden lies on the assessee, though the entry is not in his own name, to explain satisfactorily the nature and source of that entry. But, if the entry stands not in the name of any such person having a close relation or connection with the assessee, but in the name of an independent party, the burden will still lie upon him to establish the identity of that party and to satisfy the Income-tax Officer that the entry is real and not fictitious. Once the identity of the third party is established before the Income-tax Officer and other such evidence are prima facie placed before him pointing to the fact that the entry is not fictitious, the initial burden lying on the assessee can be said to have been duly discharged by him. It will not, therefore, be for the assessee to explain further as to how or in what circumstances the third party obtained the money and how or why he came to make advance of the money as a loan to the assessee. Once such identity is established and the creditors, as in the instant case, have pledged their oath that they have advanced the amounts in question to the assessee, the burden immediately shifts on to the department to show as to why the assessee's case could not be accepted and as to why it must be held that the entry, though purporting to be in the name of a third party, still represented the income of the assessee from a suppressed source. And, in order to arrive at such a conclusion, even the department has to be in possession of sufficient and adequate materials. As I have already indicated above, the Income-tax Officer's rejection not of the explanation of the assessee, but of the explanation regarding the source of income of the depositors, cannot by itself lead to any inference regarding the non-genuine or fictitious character of the entries in the assessee's books of account. Nor, for that matter, is there any such finding recorded either by the Income-tax Officer or the Appellate Assistant Commissioner. On the contrary, the Appellate Assistant Commissioner, whose appellate order in favour of the assessee forms part of the statement of the case, marked "B", clearly points out that the findings recorded by the Income-tax Officer were no positive findings. The Appellate Assistant Commissioner, in my view, had rightly assessed the position in law by holding that, in order to rope in any amount as the income of the assessee from undisclosed sources, or as secreted profits, there must be some tangible materials.
Jainarayan Balabakas Of Khamgaon vs Commissioner Of Income-Tax, Madhya ... on 7 September, 1956
4. Mr. N. P. Agrawala, learned counsel for the assessee, contended, and, in my view, rightly so, that the position under Section 68 of the 1961 Act is in no way different from that with regard to cash credit entries prior to the 1961 Act; and although there was no specific statutory provision in the 1922 Act, the principles which governed cases arising under the 1922 Act would also govern cases falling under Section 68 of the 1961 Act. Learned counsel further contended that there was absolutely no inconsistency in the various decisions of the various High Courts as also of the Supreme Court in so far as the question at issue is concerned. One line of cases lays down that, where an assessee shows that the entries regarding cash credits in third parties' accounts are genuine and the sums were, in fact, received from third parties as loans or deposits, the onus is discharged by the assessee. In that case it would be for the third parties to explain their sources of the money so advanced. In any event, such loans cannot be charged as the assessee's income, in the absence of any cogent material to indicate that they belonged to the assessee. The position in law, however, is different in so far as the degree of heaviness of the burden to prove varies where the credit entries in the assessee's books of account are in favour of, say, partners of the firm, of which the assessee is himself a member, in the assessee's own name in any different capacity, in the name of the assessee's wife or children, in the names of other near relatives of the assessee, in the names of employees of the assessee, or in the names of other such units as have got some financial interest common to the assessee. In my view, the law is too well-settled, and this I say not only on account of consensus of judicial opinion, but also for the additional reason that, stretching the doctrine of onus too far, in the case of entries in favour of third parties, who themselves come forth and admit that they had advanced the loans, the addition of such amounts as from undisclosed sources or secreted profits in the assessee's books of account, on rejection of such statements made by disinterested third parties, would lead to an absurd inconvenience, which the statute does not envisage. Decisions are numerous; to wit, a Bench decision of this court in Radhakrishna Bihari Lal v. Commissioner of Income-tax, [1954] 26 ITR 344 (Pat), a Bench decision of the Nagpur High Court in Jainarayan Balabakas of Khamgaon v. Commissioner of Income-tax, [1957] 31 ITR 271 (Nag), a Bench decision of the Allahabad High Court in Ram Kishan Das Munnu Lal v. Commissioner of Income-tax, [1961] 41 ITR 452 (All) and a Bench decision of the Bombay High Court in Orient Trading Co. Ltd. v. Commissioner of Income-tax, [1963] 49 ITR 723 (Bom), may be referred to as authorities for the proposition that, if a credit entry stands in the name of the assessee himself, the burden is undoubtedly on him to prove satisfactorily the nature and source of that entry and to show that it does not constitute a part of his income liable to tax. If the credit entry stands in the names of the assessee's wife and children, or in the name of any other near relation, or an employee of the assessee, the burden lies on the assessee, though the entry is not in his own name, to explain satisfactorily the nature and source of that entry. But, if the entry stands not in the name of any such person having a close relation or connection with the assessee, but in the name of an independent party, the burden will still lie upon him to establish the identity of that party and to satisfy the Income-tax Officer that the entry is real and not fictitious. Once the identity of the third party is established before the Income-tax Officer and other such evidence are prima facie placed before him pointing to the fact that the entry is not fictitious, the initial burden lying on the assessee can be said to have been duly discharged by him. It will not, therefore, be for the assessee to explain further as to how or in what circumstances the third party obtained the money and how or why he came to make advance of the money as a loan to the assessee. Once such identity is established and the creditors, as in the instant case, have pledged their oath that they have advanced the amounts in question to the assessee, the burden immediately shifts on to the department to show as to why the assessee's case could not be accepted and as to why it must be held that the entry, though purporting to be in the name of a third party, still represented the income of the assessee from a suppressed source. And, in order to arrive at such a conclusion, even the department has to be in possession of sufficient and adequate materials. As I have already indicated above, the Income-tax Officer's rejection not of the explanation of the assessee, but of the explanation regarding the source of income of the depositors, cannot by itself lead to any inference regarding the non-genuine or fictitious character of the entries in the assessee's books of account. Nor, for that matter, is there any such finding recorded either by the Income-tax Officer or the Appellate Assistant Commissioner. On the contrary, the Appellate Assistant Commissioner, whose appellate order in favour of the assessee forms part of the statement of the case, marked "B", clearly points out that the findings recorded by the Income-tax Officer were no positive findings. The Appellate Assistant Commissioner, in my view, had rightly assessed the position in law by holding that, in order to rope in any amount as the income of the assessee from undisclosed sources, or as secreted profits, there must be some tangible materials.
Ram Kishan Das Munnu Lal vs Commissioner Of Income-Tax, U. P. & V. P. on 13 September, 1960
4. Mr. N. P. Agrawala, learned counsel for the assessee, contended, and, in my view, rightly so, that the position under Section 68 of the 1961 Act is in no way different from that with regard to cash credit entries prior to the 1961 Act; and although there was no specific statutory provision in the 1922 Act, the principles which governed cases arising under the 1922 Act would also govern cases falling under Section 68 of the 1961 Act. Learned counsel further contended that there was absolutely no inconsistency in the various decisions of the various High Courts as also of the Supreme Court in so far as the question at issue is concerned. One line of cases lays down that, where an assessee shows that the entries regarding cash credits in third parties' accounts are genuine and the sums were, in fact, received from third parties as loans or deposits, the onus is discharged by the assessee. In that case it would be for the third parties to explain their sources of the money so advanced. In any event, such loans cannot be charged as the assessee's income, in the absence of any cogent material to indicate that they belonged to the assessee. The position in law, however, is different in so far as the degree of heaviness of the burden to prove varies where the credit entries in the assessee's books of account are in favour of, say, partners of the firm, of which the assessee is himself a member, in the assessee's own name in any different capacity, in the name of the assessee's wife or children, in the names of other near relatives of the assessee, in the names of employees of the assessee, or in the names of other such units as have got some financial interest common to the assessee. In my view, the law is too well-settled, and this I say not only on account of consensus of judicial opinion, but also for the additional reason that, stretching the doctrine of onus too far, in the case of entries in favour of third parties, who themselves come forth and admit that they had advanced the loans, the addition of such amounts as from undisclosed sources or secreted profits in the assessee's books of account, on rejection of such statements made by disinterested third parties, would lead to an absurd inconvenience, which the statute does not envisage. Decisions are numerous; to wit, a Bench decision of this court in Radhakrishna Bihari Lal v. Commissioner of Income-tax, [1954] 26 ITR 344 (Pat), a Bench decision of the Nagpur High Court in Jainarayan Balabakas of Khamgaon v. Commissioner of Income-tax, [1957] 31 ITR 271 (Nag), a Bench decision of the Allahabad High Court in Ram Kishan Das Munnu Lal v. Commissioner of Income-tax, [1961] 41 ITR 452 (All) and a Bench decision of the Bombay High Court in Orient Trading Co. Ltd. v. Commissioner of Income-tax, [1963] 49 ITR 723 (Bom), may be referred to as authorities for the proposition that, if a credit entry stands in the name of the assessee himself, the burden is undoubtedly on him to prove satisfactorily the nature and source of that entry and to show that it does not constitute a part of his income liable to tax. If the credit entry stands in the names of the assessee's wife and children, or in the name of any other near relation, or an employee of the assessee, the burden lies on the assessee, though the entry is not in his own name, to explain satisfactorily the nature and source of that entry. But, if the entry stands not in the name of any such person having a close relation or connection with the assessee, but in the name of an independent party, the burden will still lie upon him to establish the identity of that party and to satisfy the Income-tax Officer that the entry is real and not fictitious. Once the identity of the third party is established before the Income-tax Officer and other such evidence are prima facie placed before him pointing to the fact that the entry is not fictitious, the initial burden lying on the assessee can be said to have been duly discharged by him. It will not, therefore, be for the assessee to explain further as to how or in what circumstances the third party obtained the money and how or why he came to make advance of the money as a loan to the assessee. Once such identity is established and the creditors, as in the instant case, have pledged their oath that they have advanced the amounts in question to the assessee, the burden immediately shifts on to the department to show as to why the assessee's case could not be accepted and as to why it must be held that the entry, though purporting to be in the name of a third party, still represented the income of the assessee from a suppressed source. And, in order to arrive at such a conclusion, even the department has to be in possession of sufficient and adequate materials. As I have already indicated above, the Income-tax Officer's rejection not of the explanation of the assessee, but of the explanation regarding the source of income of the depositors, cannot by itself lead to any inference regarding the non-genuine or fictitious character of the entries in the assessee's books of account. Nor, for that matter, is there any such finding recorded either by the Income-tax Officer or the Appellate Assistant Commissioner. On the contrary, the Appellate Assistant Commissioner, whose appellate order in favour of the assessee forms part of the statement of the case, marked "B", clearly points out that the findings recorded by the Income-tax Officer were no positive findings. The Appellate Assistant Commissioner, in my view, had rightly assessed the position in law by holding that, in order to rope in any amount as the income of the assessee from undisclosed sources, or as secreted profits, there must be some tangible materials.
Orient Trading Co. Ltd. vs Commissioner Of Income-Tax (Central), ... on 30 August, 1962
As a matter of fact, the decision of the Bombay High Court in Orient Trading Company's case was referred to in that case, and it was on the distinction of the facts of the Bombay case and the Calcutta case that a different conclusion was arrived at by the Bench of the Calcutta High Court in the above mentioned case, as it has itself said at page 415 of the reports :
Section 131 in The Income Tax Act, 1961 [Entire Act]
Northern Bengal Jute Trading Co. Ltd. vs Commissioner Of Income-Tax. on 25 January, 1967
7. It may be noticed from the facts of the Northern Bengal Jute Trading Company's case that the credit entries in question in that case were standing in the names of either employees of the assessee or an associate firm, Messrs. Surajmull Nagarmull. That being the position, it was held, on the facts of that case and the surrounding circumstances obtaining therein, that the initial onus had not been discharged by the assessee.
Section 256 in The Income Tax Act, 1961 [Entire Act]
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